What Are Ripple and XRP?

What is Ripple?

Ripple is a real-time cryptocurrency gross settlement, currency exchange, and money transfer network created by the American technology company Ripple Labs Inc. The company created the XRP cryptocurrency, which it describes as “a digital asset built for global payments.” In short, we can say that Ripple is targeting the international remittance market.

The maximum number of XRP tokens is 100 billion, and the company controls about 60% of them. The organization has deposited the approximately 55 billion XRP coins it owns into a secure escrow account from which it can release one billion coins each month.

Ripple’s advantages

Nowadays, sending money around the world can often be very expensive, and banks charge huge fees and commissions. Besides, outdated banking systems can also mean that payments take days to reach the recipient's bank account. The XRP coin is designed to solve this problem by allowing you to send large amounts of money safely and quickly at a very low cost. This provides the opportunity for both customers and financial institutions to make quick money transactions.

As a result, it’s significant that Ripple has already attracted an impressive list of banks and payment processors that use its network, including American Express, Bank of America, HSBC, Barclays, Royal Bank of Scotland, Santander, UniCredit and Japan's SBI Holdings.

According to the Ripple cryptocurrency team, XRP also offers compelling advantages over other established digital currencies. While it can take more than an hour for BTC transactions to clear and about two minutes for an ETH (Ethereum) payment to complete, Ripple claims that its XRP payments clear in three to five seconds.

XRP vs BTC

Ripple (XRP) and Bitcoin were created for different purposes and aren’t in direct competition. Bitcoin is the most accessible cryptocurrency as it allows anyone to trade or carry BTC anywhere in the world. XRP is more like a specialized tool for conducting cross-border transactions at lower prices and faster speeds than conventional fiat currency.

For trading, Bitcoin price is more influenced by different countries’ regulation changes, market predictions and world situation. Otherwise, the XRP mostly depends on Ripple’s collaboration with financial institutions rather than price.

Ripple and SEC

The recent conflict between Ripple and the SEC had influenced on the XRP price.

The US Securities and Exchange Commission (SEC) has accused the company, its co-founder Chris Larsen and its CEO Brad Garlinghouse of violating US laws by selling XRP as an unregistered security. The SEC has successfully taken legal action or investigated crypto projects such as BitConnect and Binance Holdings, often resulting in financial or regulatory sanctions. It usually provokes a sharp decline in the value of the token. However, in this case, Ripple’s legal team claims that the SEC itself is to blame for publishing confusing cryptocurrency guidelines.

While Ripple has so far failed to get the lawsuit dismissed, and while this could lead to serious problems for the company if it continues to develop further, the company does have some strong bargaining chips against Ripple and the SEC. Such a lawsuit is now seen by some as the “test of the century” on cryptocurrencies – or, of course, as a very fitting test of the future of cryptocurrencies, or perhaps the SEC’s authority and ability to regulate them.

On March 12, 2022, a district judge allowed Ripple to use fair notice, denying the SEC's motion. As a result, Ripple has an opportunity to object because the SEC didn’t inform Ripple about how the sale of XRP could violate pre-established legislation. Hot on the heels of the decision, XRP jumped on the price charts. However, the judge refused to close the case against Ripple's management, so despite the procedural victory, the case is far from over.

Overall, Ripple (XRP) is currently seeking opportunities to collaborate with Congress on the smart regulation of cryptocurrencies to end the murky reputation that the industry currently has, help find a way to protect consumers, and also promote innovation in the market.

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2024-05-28 • Updated

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